The fall of American Apparel

Last week, Los Angeles-based clothing manufacturer American Apparel was bought in a bankruptcy auction. Even as Donald Trump touts his ambitions to keep jobs in the U.S, the company’s sale will lead to the loss of thousands of manufacturing jobs as the work is likely sent overseas.

The sale of American Apparel represents a stunning fall for a company that was once synonymous with fashion industry success and the label “Made in the U.S.A.”

It was also synonymous with being young and trendy in the early 2000s.

“You cannot deny the importance and significance of American Apparel because it did, at its height, tap into this emerging hipster culture,” said fashion journalist Melissa Magsaysay.

And those emerging hipsters embraced American Apparel’s 1970s inspired t-shirts, swimsuits, leotards and hoodies. It was fashion that was marketed in racy advertising campaigns featuring young models wearing as little of American Apparel’s actual apparel as possible.

But what really got attention inside the fashion industry was how and where American Apparel made its clothes.

While other companies use subcontractors in low-wage countries to cut and sew their products, American Apparel kept its manufacturing in-house and in the country, specifically at its enormous factory in downtown Los Angeles and satellite facilities.

“It tried the noble experiment of making basic product in the United States, in competition with that that is being brought over from Asia or made in Mexico, and it did it well,” said Ilse Metchek, president of the California Fashion Association, an industry trade group.

Making clothes locally instead of going abroad was the idea of American Apparel’s funder and former CEO Dove Charney.

He made the words “sweatshop free” a company slogan and trumpeted American Apparel’s commitment to offering its largely immigrant workforce a living wage and full benefits.

“Most clothing is made in exploitative settings,” said Charney addressing an academic conference in 2003.” So what we’re doing in L.A. is figuring out how to make clothing so it doesn’t damage people’s lives. We’re maintaining profitability while maintaining human dignity.”

At its height, American Apparel was the largest clothing manufacturer in the country. It also opened dozens of brick and mortar retail stores in trendy neighborhoods from L.A. to Brooklyn to Berlin.

But then things started to unravel.

In 2009, federal immigration auditors found 1,800 undocumented individuals working at American Apparel’s factory and the company was forced to let them go.

In 2014, citing sexual and business misconduct, American Apparel’s board fired Charney, who then retaliated by suing the company. All the while, American Apparel’s debts mounted and its losses grew, forcing the company to file for bankruptcy twice.

That culiminated in last week’s purchase of American Apparel’s equipment and its intellectual assets – basically its name – by Canadian clothing company Gildan for $88 million.

That was followed by American Apparel announcing it would layoff more than 2,000 garment workers. And they won’t be the only casualties of the company’s fall. Gilman has given American Apparel 100 days to operate its remaining stores and e-commerce site. After that, it’s believed they’ll close and the employees will be let go.